New owner...already having failure warning
09-02-2010, 06:28 PM
#31
Instructor
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Janusz, warranty companies act like insurance companies.
With some customers, they will keep more of the paid premium than they pay out.
With some customers, they will pay more out than what they collected as premium.
They have actuaries who are basically very talented mathematicians who get paid a lot of money (I have 2 friends who are actuaries for Liberty Mutual insurance and another for State Farm that underwrites extended warranties) - and what they do is set a 'premium' and define what risks they will take on.
Warranty companies, like insurance companies - need to make money to stay in business. They are "for profit" - and not charitable / non profit organizations. That means they need to keep more premiums than they pay out.
I don't doubt your story that in your case, the warranty company paid out more than they collected from you in premiums. But I think as many here have stated, you are the exception - not the norm - and the warranty company probably keeps more $$ than they pay out because the number of customers filing claims and the amount for which they claim is far less than what they've collected in premiums.
But anyway - GOOD FOR YOU! I'm happy it worked out for you.
With some customers, they will keep more of the paid premium than they pay out.
With some customers, they will pay more out than what they collected as premium.
They have actuaries who are basically very talented mathematicians who get paid a lot of money (I have 2 friends who are actuaries for Liberty Mutual insurance and another for State Farm that underwrites extended warranties) - and what they do is set a 'premium' and define what risks they will take on.
Warranty companies, like insurance companies - need to make money to stay in business. They are "for profit" - and not charitable / non profit organizations. That means they need to keep more premiums than they pay out.
I don't doubt your story that in your case, the warranty company paid out more than they collected from you in premiums. But I think as many here have stated, you are the exception - not the norm - and the warranty company probably keeps more $$ than they pay out because the number of customers filing claims and the amount for which they claim is far less than what they've collected in premiums.
But anyway - GOOD FOR YOU! I'm happy it worked out for you.
All you said is true except the last paragraph. Here is why:
Please understand: I expressed my belief that my warranty company loses ONLY ON 996, especially MKl. Generally on almost all car models they make a hefty profit, no doubt.
The good indicator that what I just said is true would be the fact of recent steady increases of specific premiums for 996 Porsches by my warranty carrier. They simply did not forsee how frequent and expensive water cooled Porsches repairs would be after the factory warranties expired. After all even they do not have a crystal magic ball. Porsche deals represent so miniscule percentage of their business that they did not pay a proper attention to this very segment of the business.
My opinion is somewhat informed one since I am in insurance business for the last 29 years and I am sure that a simple quick poll of aftermarket warranty users here would fully confirm what I said on this matter.
09-02-2010, 07:57 PM
#36
It's kind of sweet how innocent you are, but I'm afraid that's not going to happen.
You see, when people make a multi-thousand dollar bet like this, they immediately become biased and reframe their decision based on subsequent experience. Those who made good use of the warranty will be very vocal participants. Those who did not will stay out of the discussion altogether. It's actually very difficult, even with a carefully designed sample, to get objective data when you're tracking satisfaction with a product like discretionary insurance. It's the same phenomenon that causes us to hear about winners in Vegas in far greater proportion to losers than could possibly have been the case, or that causes us to hear more stories about radar detectors saving people's asses in proportion to those that sat silent on the dashboard for months at a time. I refer you to the work of Daniel Kahneman (a Nobel winner) and Richard Thaler on the phenomenon of post-purchase reframing.
Hell, you've exposed your own bias by saying you were in the insurance business.
What Thaler would say is that the true benefit of insurance isn't economic anyway, it's emotional. Thus, the only valid research would be a study of general satisfaction of Porsche 996 owners, maybe even in two cells - one with warranties and one without - with both samples identically normalized for things like income and usage of the car, and then derive the emotional value of the warranty from responses to a battery of general questions about trust in the vehicle, anxiety about maintenance costs, and so on. I don't know how someone like Dell would approach this, but in the world of market research, this would produce a satisfactory level of confidence in the results. Whereas, only a fool would believe a voluntary survey on a topic like this.
If you'd like to mount such a study, be my guest. I can recommend some excellent research houses to field the survey for you. Expect it to run you around $50,000.
That's just over 50 IMS bearing upgrades, roughly.
You see, when people make a multi-thousand dollar bet like this, they immediately become biased and reframe their decision based on subsequent experience. Those who made good use of the warranty will be very vocal participants. Those who did not will stay out of the discussion altogether. It's actually very difficult, even with a carefully designed sample, to get objective data when you're tracking satisfaction with a product like discretionary insurance. It's the same phenomenon that causes us to hear about winners in Vegas in far greater proportion to losers than could possibly have been the case, or that causes us to hear more stories about radar detectors saving people's asses in proportion to those that sat silent on the dashboard for months at a time. I refer you to the work of Daniel Kahneman (a Nobel winner) and Richard Thaler on the phenomenon of post-purchase reframing.
Hell, you've exposed your own bias by saying you were in the insurance business.
What Thaler would say is that the true benefit of insurance isn't economic anyway, it's emotional. Thus, the only valid research would be a study of general satisfaction of Porsche 996 owners, maybe even in two cells - one with warranties and one without - with both samples identically normalized for things like income and usage of the car, and then derive the emotional value of the warranty from responses to a battery of general questions about trust in the vehicle, anxiety about maintenance costs, and so on. I don't know how someone like Dell would approach this, but in the world of market research, this would produce a satisfactory level of confidence in the results. Whereas, only a fool would believe a voluntary survey on a topic like this.
If you'd like to mount such a study, be my guest. I can recommend some excellent research houses to field the survey for you. Expect it to run you around $50,000.
That's just over 50 IMS bearing upgrades, roughly.
09-02-2010, 09:11 PM
#38
Instructor
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Simple question: these people who've had an aftermarket warranty for over 3 yrs and 50 K Km just state if they lost or saved money. That would be all to convince everybody without being too scientific.
Whatever. I just keep on enjoying my car for next almost 4 years carefree and then move to next one. No emotion here, just SIMPLE COMMON SENSE.
For last 30 years nobody called me innocent, even my wife. You made my day, thanks.
Whatever. I just keep on enjoying my car for next almost 4 years carefree and then move to next one. No emotion here, just SIMPLE COMMON SENSE.
For last 30 years nobody called me innocent, even my wife. You made my day, thanks.
09-05-2010, 09:28 AM
#39
Burning Brakes
Join Date: Aug 2006
Location: CURRENT: Audi TT / Audi A3
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Just because a Porsche is cheap to buy doesn't mean it will be cheap to own. This has always been true, all the way back to the 356. I hate to sound heartless, but I really don't see the logic in buying a car for pleasure alone, and then making yourself miserable worrying about it.
If I were in your shoes, I'd sell the car and buy yourself something you'll love and can live with. Life is too short, and the world is full of entertaining cars that won't stress you out like this.
If I were in your shoes, I'd sell the car and buy yourself something you'll love and can live with. Life is too short, and the world is full of entertaining cars that won't stress you out like this.
When asked for my opinion about a sports car purchase, I often steer people to Japanese cars when they identify "reliability and low maintenance/repair costs" as their top priorities. Cars like the Mazda Miata and Honda S2000 come to mind as cars that are fun to own and, in this regard, have moderate entrance pricing whether new or used.
09-05-2010, 03:41 PM
#40
Rennlist Member
**** happens.. Take it to the shop and see whats up? Unless you want to work on it yourself.. If you do.. Dig in.. If not, take it to the shop. Please dont tell me you bought a porsche and cant afford the upkeep?
Take the thing to the shop and see whats wrong with it.
Sounds like a good plan to me?
Take the thing to the shop and see whats wrong with it.
Sounds like a good plan to me?
